 "NTPC")
NTPC in focus: Domestic and international brokerages have increased their target prices for the power giant National Thermal Power Corporation (NTPC), following the announcement of its March quarter (Q4FY24) results on May 24.
JM Financial revised their target price to Rs 414 from Rs 368, maintaining a 'Buy' rating on the stock. Analysts cited sustained growth in regulated equity, driven by the revival in margin-accretive thermal capex and gradual improvement in renewables execution.
Meanwhile, Nuvama pointed out that NTPC missed its 4QFY24E adjusted profit after tax, despite a 13 per cent higher year-on-year (Y-o-Y) regulated equity, indicating profit growth spill-over to FY25. Analysts highlighted FY24 consolidated profit after tax (PAT) rose 25 per cent year-on-year (Y-o-Y), on higher subsidiaries’ and joint venture (JV) share in profit.
“With rising commissioning of projects in FY25/26, both thermal and renenwable energy (RE), coupled with Central Electricity Regulatory Commission (CERC) incentive benefits from FY25 and the aforesaid profit spillover, we are raising FY25E/26E by 13 per cent/19 per cent. This along with an increase in the target price-to -book value ratio (P/BV) to 3x (from 2.5x) yields a revised target price (TP) of Rs 435 (earlier Rs 367); retain Buy," Nuvama said in a note.
ICICI Securities stressed upon NTPC's position in the increasing total addressable market for power capex, benefiting from both conventional and renewables sectors. They estimated a 10-12 per cent compound annual growth rate (CAGR) in cost-plus earnings in the medium term and projected a 30 per cent CAGR growth in earnings before interest, taxes, depreciation and amortisation (Ebitda) of renewable energy (RE) capacity over the next three years. “As a result, we expect Ebitda of RE capacity to grow at 30 per cent CAGR over the next three years. We resume coverage on NTPC with 'Buy' and sum-of-the-parts-based (SoTP) target price of Rs 495 per share,” ICICI Securities said.
Kotak Institutional, however, remained cautious, despite increasing the target price to Rs 275, citing fully factored growth aspirations in valuations.
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According to reports, international brokerage firm Jefferies reiterated its 'Buy' rating on NTPC, upping the target price to Rs 445 per share. Citi also maintained its 'Buy' stance, revising the target price to Rs 467 per share. Conversely, Morgan Stanley upheld its 'Overweight' recommendation for NTPC, setting a target price of Rs 390 per share.
Q4FY24 results
Overall, NTPC reported a 33 per cent rise in consolidated profit to Rs 6,490 crore in Q4FY24, driven by higher revenues.
The company's board recommended a final dividend of Rs 3.25 per equity share for FY24, in addition to interim dividends paid earlier.
Additionally, the board approved the incorporation of a wholly-owned subsidiary company for undertaking nuclear energy business.
The company's board recommended a final dividend of Rs 3.25 per equity share for FY24, in addition to interim dividends paid earlier.
Additionally, the board approved the incorporation of a wholly-owned subsidiary company for undertaking nuclear energy business.
NTPC's average tariff was Rs 4.61 per unit during fiscal 2023-24, as compared to Rs 4.89 per unit a year ago. Gross electricity generation increased to 93.387 BU during the fourth quarter and to 361.70 BU for fiscal 2023-24.
Stock performance
The stock hit a fresh 52-week high of Rs 381.25 per share in intraday trading on Bombay Stock Exchange (BSE), but is trading 1.24 per cent lower at Rs 370.20, at 10:17 AM. By comparison, S&P BSE Sensex was up 0.07 per cent at 75,461.41 levels.
